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Before you select which type of dividend stock you would like to add to your portfolio, it’s important to do your research. Just like any other type of stock, there’s a risk when it comes to investing and there’s no guarantee that you’ll earn any money. That said, depending on which dividend stocks you choose, you’ll get paid out your dividends at different times.
How to Recognize a Good Dividend Stock
When it comes to choosing the right dividend stocks, there are some things that you want to look for that will indicate that the stock is the right choice. The first thing that you want to look at is the company's annual growth from an earnings perspective as well as a dividend growth perspective. While a lot of companies do experience profitable times, a good choice for a dividend stock is one that shows consistent growth.
When looking to buy stocks, it’s important to to look at what the growth of the stock is on the Canadian market. Stocks that have a really high growth tend to drop and the stock price drops. Those stocks who have reasonable growth are the best for dividend stocks. They tend to hold their stock price and have high dividend yields.
On top of having a good profit margin, it’s best to invest in dividend stocks that have healthy cash flows. This is important because the company will need to pay dividends. Ideally the company you’re investing in will have at least a 5 year record of paying dividends. You also want to steer away from a company that has a lot of debt.
Best Dividend Stocks in Canada
With so many different dividend stocks to choose from in Canada to increase your dividend income as well as your passive income, there are a few that are considered to be better than the others. This list consists of Canadian energy companies, Canadian utilities companies, natural gas companies and other profitable corporations.
It’s important to keep in mind that these aren’t all the best dividend stocks in Canada, just a select few. We don’t include any of the Canadian retail companies, Canadian National Railway, Real Estate Investment Trusts and others that are on the Canadian market and could be included.
IGM Financial (TSX:IGM)
IGM Financial is a large company that operates in the management and distribution of mutual funds as well as other asset products that are managed. It was founded in 1978 and has an annual revenue of $1,148.9 million as of the end of 2023. They have a market capitalization of $8.56 Billion and an enterprise value of $15.15 Billion.
IGM Financial administers dividend payments on a quarterly basis, with a current annual dividend of $2.25 Canadian per share and a dividend yield of 6.25%. The buyback yield for IGM is 0.13% while their shareholder yield is 6.38%. Their overall payout ratio is 54.09%, with an earnings yield of 11.60%. The cost of each share is currently around $36.14
Bank of Nova Scotia (TSX:BNS)
The Bank of Nova Scotia is one of Canada’s largest banks. They have a market capitalization of $78.51 Billion, a revenue of $32.21 Billion, and a net income of $7.85 Billion. They have been around since 1832.
The Bank of Nova Scotia is another dividend payer that pays out quarterly. This stock has a dividend yield of 6.64% and an annual dividend of $4.24 Canadian per share. It has a dividend growth of 2.17% and a dividend payout ratio of 69.28%. The buyback yield is -1.83%, shareholder yield is 4.78%, and it has an earnings yield of 9.96% with an FCF yield of 21.73%, The current price per share for the Bank of Nova Scotia stock is around $63.76 Canadian.
Whitecap Resources (TSX:WCP)
Another large company that has a strong dividend yield in Canada is Whitecap Resources. They are a Canadian oil and gas company that is located in Calgary, Alberta. They have a market capitalization of $6.34 Billion, a revenue of $3.68 Billion and a net income of $686.20 Million.
Whitecap Resources pays out their dividends more often than a lot of the other Canadian stocks. Theirs are paid out on a monthly basis. This particular stock has a dividend yield of 6.42% and an earnings per share of $0.68. The payout ratio is 60.17% and a strong dividend growth streak of 38.21%.
While this stock may only have 2 years of dividend growth, they have a buyback yield of 1.29%, a shareholder yield of 7.90% and a FCF yield of 5.69%. Whitecap Resources also has an earnings yield of 10.82%. The price per share is around $10.60.
iA Financial (TSX:IAG)
A large company that offers financial stocks is iA Financial Corporation. They’re a Canadian insurance and wealth management company that has been around since 1982. While they do operate in both the US and Canada, they’re headquartered in Quebec City. The current price of each share for iA Financial is around $87.91.
In regards to the iA Financial stock, it has a dividend yield of 3.55% with an annual dividend per share of $3.12 Canadian. The payout frequency is quarterly with a payout ratio of 43.14% and a dividend growth rate of 17.55%. The shareholder yield for this stock is 8.28%, while the buyback yield is 4.76%. The FCF yield is 3.92% and the earnings yield is 8.72%.
Enghouse Systems (TSX:ENGH)
Enghouse systems is a Canadian software and services company that has been around since 1984. It’s headquartered in Markham, Ontario and has a market capitalization of $8.5 Billion and an enterprise value of $8.64 Billion. The price of stock is $88.74.
Like many other dividend stocks, Enghouse Systems pays out on a quarterly basis. They have a dividend yield of 3.52% and an annual dividend payout of $3.51 per share. They have a dividend growth of 17.55% and a payout ratio of 43.14%. The buyback yield is 4.76%, while the shareholders yield is 8.28% and the earnings yield is 8.72%. THis share also has an FCF yield of 3.92%.
Royal Bank of Canada (TSX:RY)
As one of the largest banks in Canada that offers personal and commercial banking, they’re also one of the best dividend stocks to purchase. Even though the bank is quite profitable with a market capitalization of $209.80 Billion, a revenue of $73.68 Billion and a net income of $15.23 Billion, the cost of a share isn’t too high with a current purchase price of around $148.98.
When it comes to dividends, the Royal Bank of Canada has an annual dividend of $4.04 Canadian per share and a dividend yield of 2.71%. This share pays out quarterly and has a dividend growth of 3.78% and a payout ratio of 37.71%.
Russel Metals (TSX:RUS)
This Canadian company is headquartered in Mississauga, Ontario, while they operate in both the US and Canada. They’re one of the largest metal distributors in North America and have been around since 1929. Not only do they distribute metals, they also process them. The price of their stock is around $36.57.
In regards to dividends, Russel Metals pays $1.62 Canadian annually and has a dividend yield of 4.43%. The dividend growth is 5.19% and it has a payout ratio of 40.91%. The buyback yield on this stock is 2.14% with a shareholder yield of 7.57%. The earnings yield is 10.99% and the FCF yield is 14.24%.
Canadian Natural Resources (TSX:CNQ)
Canadian Natural Resources Limited is also known as CNRL is a Canadian oil and gas company that operates in western Canada. That said, they’re primarily based out of Calgary, Alberta. They’ve been in operation since 1973.
CNRL currently pays $4.38 per share and has a dividend growth rate of -29.08% and has a dividend yield of 4.18%. The buyback yield is 2.91% while the shareholder yield is 7.09%. CNRL also has a FCF yield of 8.20% and an earnings yield of 6.64%. The cost per share is $104.70.
Secure Energy Services (TSX:SES)
Secure Energy Services is another Canadian company that’s headquartered in Calgary, Alberta. They offer Canadians solutions in waste management, energy infrastructure and oil services. They’ve been in operation since 2007.
With the Secure Energy Services stock, there’s a dividend payout of $0.40 per share and a dividend yield of 3.54%. They have a dividend growth rate of 86.05% and a payout ratio of 20.62%. It has a buyback yield of 7.59%, a shareholder yield of 11.10%, a FCF yield of 5.23%, and an earnings yield of 17.80%. The cost of each share is $11.30.
Acadian Timber (TSX:ADN)
Acadian Timber is a forestry company that is located in Edmundston, New Brunswick. They manage around 1.1 million acres of freehold timberlands. This company has a market capitalization of $302.99 Million and a revenue of 99.92 Million with a net income of $29.84 Million.
Acadian Timber has a dividend yield of 150.54% and an annual dividend of $26.39 per share. They payout their dividends quarterly and have a growth rate of -24.17%. That said, their payout is $1,525.43%. This stock offers a buyback yield of -1.75%, a shareholder yield of 148.70%, a FCF yield of 1.44% and an earnings yield of 9.86%. The price of the stock is $17.53 per share.
Breakdown of Best Dividend Stocks
While we have gone over some of the top Canadian dividend stocks, there are certain quality stocks that fall into certain categories. Let’s take a look at some of these stocks and which are some of the best stock picks in each category.
Best Monthly Dividend Stock
While it isn’t listed here, one of the best monthly dividend stocks and overall top dividend stocks is AGNC Investment Corp (AGNC). They have a dividend yield of 15.02% and a payout ratio of 148.45%. This company has a market capitalization of $7.06 Million and a net income of $625.00 Million. The cost per share is $9.59.
7.9 Dividend Stock
Due to the fact that market conditions are always changing, stocks that were once 7.9 are no longer 7.9. The Canadian stock that hovers around 7.9 is Enbridge INC (ENB). The current dividend yield is 7.3% and it has a market capitalization of $105.94 Billion. The stock price is around $49.83 per share.
Highest Paying Dividend Stock
One of the current highest paying dividend stocks that is popular among Canadian investors is Whitecap Resources (TSE:WCP). They currently have a dividend yield of 7.1&% and are affordable at around just $10.67 per share. The market capitalization of this company is $6.09 Billion with an average volume of $2.07 Million.
Best TFSA Stock
One of the many ways that investors choose to invest dividend stocks is in Tax Free Savings Accounts. One of the most popular of these stocks is BCE (TSE:BCE). It has a dividend yield of 8.58% and a market capitalization of $42.45 Billion. The average volume is $2.65 Million and the cost of each stock is about $46.55. As an alternative, though, another popular TFSA Stock is the Bank of Nova Scotia.
Best Long Term Canadian Stock
One of the best long term Canadian dividend stocks is the Royal Bank of Canada. However, with that in mind, there are plenty of other options available for long term stocks. Here is just a few:
- Toronto Dominion Bank (TSE:TD)
- Goeasy (TSE:GSY)
- National Bank (TSE:NA)
All of these, including Goeasy stock, are in the financial industry.
Best Stock Under $20
While a good number of stocks that we’ve gone over are under $20, not all of them are. Also, we haven’t gone over all of the good dividend stocks that have a price of under $20. Here’s a few more that we can add to the list that are affordable but also have a proven track record.
Telus Corp TSE:T
Telus is a large company that is located in Vancouver BC. The dividend yield is 6.79% which is considered a high yield, and they have a market cap of $32.98 Billion. The average volume is $3.23 million. While the current stock price is $22,34, this cost does vary. Even though it’s currently slightly over $20 it’s still very affordable.
TC Energy Corp
This is a North American utility company that provides energy to Canada as well as the US and Mexico. They were founded in 1951 and headquartered in Calgary, Alberta. There are a few different stock variations associated with this company but the TSE:TRP A is their most affordable. With higher dividend yields of 23.13% and a price of $16.83, it’s really quite popular and is known to produce a good return for majority shareholders.
BCE Inc (TSE:BCE-R)
BCE Inc, more commonly referred to as Bell Communication Inc, is a telecommunications and media company. With the BCE preferred series share R the dividend yield is 24.75% with a share price of $16.12. This company has a market capitalization of $42.40 Billion and an average volume of $9.00K.
Final Thoughts
As you can see, there are many different dividend stocks in Canada that are available to help grow your portfolio. Before you start purchasing stocks, though, it’s recommended that you do your research. This is because some dividend stocks are more stable than others. However, the dividend stock that you choose will be based on how long you intend to hold the stock and how much you’re looking to invest.
When it comes to investing, there’s no one size fits all approach. Every investor will have their own ideas and goals when it comes to which stocks they want to invest in and where. If you aren’t sure where to start, it’s always a good idea to talk to a financial advisor. They can help you determine your financial goal, and which investing option is best for you to achieve financial independence.
